Our retail research team has created 3 stock lists, namely Growth, Value and Yield.
|The Growth List comprises of small-mid capitalisation companies with business catalysts which will potentially grow their earnings in the near future. The Growth portfolio would be suitable for investors looking for higher returns and are willing to tolerate the risk of higher short-term volatility of stock prices.|
|The Value List focuses on companies which are undervalued based on their share prices as compared to the company fundamentals. It would be suitable for conservative investors who prefer price stability and have a longer investment horizon.|
|The Yield List comprises of stocks that provide consistent dividend pay-out. It would be suitable for investors whose primary focus is to gain regular dividend income from their investments.|
September Market Overview
The Singapore market (STI) slightly rose 0.43% in Sep '19 on light trading volumes as investors wait to see how major geopolitical events play out, including the latest development on US-China trade war and Brexit. While the Fed cut its benchmark interest rate by an additional quarter-point, it declined to signal that further rate cuts are likely this year.
Ytd, the STI gained 1.7%, giving a total return (including dividends) of 5.3%. On an equal weighted basis, the average gain of the 30 constituent stocks was 4.7% with 12 stocks in the red, while 13 chalked double digit returns, down from 14 counters in Aug.
Stripping out outsized performer, Thai Bev (+47.9%), which is in our restricted list, the average return for STI component stocks dropped to 3.3%.
Against this backdrop, Market Insight’s Growth, Value, Yield (GVY) basket of stocks achieved an average total ytd return of 9.9%, beating the benchmark index by 5.2ppt.
Excluding top loser, Japfa, which was dragged down by the African swine flu outbreak and poor poultry prices, average ytd return for the GVY portfolio would have been a very respectable 11.7%.
Growth List +9.4% YTD
The Growth portfolio was mainly led by Venture (exited) and Penguin. The latter reported a strong 2Q19 net profit of $7.5m (+109.5%) on revenue growth of 164.1% to $52.1m. Going forward, its core shipbuilding and crewboat chartering activities are continuing to pick up amidst rising demand in new and existing markets. Crewboat chartering rates and utilisation have improved, in line with improving sentiments in the offshore O&G industry.
Value List +7.1% YTD
The Value portfolio was lifted by our timely exit of Yangzijiang and SIA Engineering (SIE) after earlier share price appreciation limited capital upside, prompting us to take profit with >20% ytd return.
CapitaLand also did well after eight-listed stocks under the enlarged group generated higher average returns than their regional and global peers ytd. This followed the completion of its $11b buyout of Ascendas-Singbridge, while in July, it proposed to combine AscottReit and A-HTrust to make the largest hospitality trust in Asia-Pacific.
Yield List +13.2% YTD
The continued strong performance by REITs bolstered the Yield portfolio on the back of increasingly flight towards defensive and high yield counters especially after the Fed cut its main interest rate for the second time this year. Markets are now watching how interest rate policy will unfold in coming months amid concern of slowing global growth and the outcome of trade war.
Note: * Priced in USD
This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within Maybank Kim Eng Securities.
This document is being distributed for general information only and it does not constitute an offer, recommendation or solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This document is for general evaluation only, it does not take into account the specific investment objectives, financial situation or particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons.
Opinions, projections and estimates are solely those of Maybank Kim Eng Securities at the date of this document and subject to change without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance. Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be).
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